7 Tips to Limit Debt
You want the advanced degree, but not the elevated debt.
Maybe a recent job loss has made the thought of going back to school more attractive, particularly with this challenging job market.
Those with a graduate or professional degree earned an estimated $12,948 more per year than those who held a bachelor’s degree in 2019.
But grad school isn’t cheap. The average cumulative student loan debt for those who earned a master’s degree was $50,300 in 2015-2016, according to the National Center for Education Statistics.
Just as graduate school is a different experience than undergrad, paying for grad school can present an alternate financial journey.
If you’re considering an advanced degree, we have seven ways to pay for grad school with the least amount of student loan debt.
7 Ways to Pay for Grad School
Paying for grad school shouldn’t leave you with insurmountable debt. We’ve found seven options to pay for grad school — use them in order to earn your diploma with the least amount of debt.
1. Your Employer
If it’s in your company’s best interest to retain talent, it could be in its best interest to pay for your grad school.
Depending on the employer, that might mean a tuition reimbursement program, or it could mean writing a proposal about how your advanced degree could help you do your job.
You may need to submit a sponsorship request if you’re asking your employer to pay for grad school tuition. Ask your college what information it requires for this letter.
Alternatively, you could pursue a job at a university that offers free tuition as a benefit.
Although it may take longer to complete a degree — employees are often limited on the number of free or reduced-price credit hours per semester — you don’t necessarily need to find a job within your chosen field to take advantage of the free tuition.
2. Free Money From Federal and State Sources
Hey, who’s this? Why it’s your old pal FAFSA.
You’ll need to fill out the Free Application for Federal Student Aid if you’re seeking grad school financial aid in the form of scholarships, grants, federal work study (FWS) and/or loans.
If you didn’t complete the FAFSA for undergrad, you’ll first need to create a FAFSA ID. You can sign up for an ID at studentaid.gov and fill out the free FAFSA application at fafsa.gov.
The good news: You’re probably old enough to qualify as an independent student, meaning you’ll no longer need to provide your parents’ financial information on the FAFSA form. Two exceptions: If you’re applying to medical or law school, you’ll still need your parents’ financial info for the FAFSA, but you won’t need their signatures.
Also good news: If you’re pursuing education for teaching, there’s additional money you can apply for:
- The Teacher Education Assistance for College and Higher Education (TEACH) Grant Program provides grants of up to $4,000 if you’re getting a master’s degree. There are strict qualifications, including a requirement to work in a high-need, low-income area for a specified amount of time. If you don’t meet all of the requirements, the grant will be converted into a direct unsubsidized loan.
- Federal Pell Grants are available to students pursuing a post-baccalaureate teacher certification program. You must demonstrate financial need, and the amount of the grant can change annually.
Filling out the FAFSA may also be a requirement to qualify for state and institutional grants and scholarship, so it’s important that you submit the application as early as possible. Find out additional state financial aid options here and your state’s FAFSA deadline here.
3. Your Institution
As a graduate student, you have opportunities for scholarships and grants from your school as well as your academic department.
One source of funding that probably wasn’t an option as an undergrad is a fellowship, which is essentially a scholarship awarded for academic excellence or research rather than financial need. In addition to the potential financial assistance it provides, a fellowship award can be a valuable addition to your resume.
You can defer your undergraduate student loans while you’re in grad school but will start accruing interest on any unsubsidized loans after administrative forbearance ends.
Academic fellowships are highly competitive, and the process can involve more than just an application — you may also have to submit nominations, presentations and recommendations.
Ask your school’s graduate program chair and your adviser about fellowships available in your field of study — and don’t forget to stop by your school’s financial aid office for schoolwide opportunities.
4. Graduate Assistantships
Snagging a graduate assistantship could be worth the effort, as they can provide money for part or all of your tuition and a living expenses stipend, along with resume-boosting experience.
Assistantships typically fall within one of the following categories:
Teaching assistantships (TA). Many graduate and Ph.D. programs will require you to serve as a teaching assistant for at least part of your time there. Depending on the school and program, you could end up spending a good portion of your time preparing for classes every week. But as a TA, you’ll also spend more time with a faculty member, which can provide valuable connections and opportunities for mentoring.
Research assistantships (RA). Most fields of study require some type of research. As a graduate research assistant, you may be tasked with duties throughout the process, from developing proposals and seeking outside funding to collecting data and presenting findings.
Administrative assistantships (AA). Grad students who serve as administrative assistants provide administrative support to their department in an office environment.
Like fellowships, graduate assistantships can provide a valuable addition to your resume, providing work experience, which could be particularly useful if you’re pursuing a graduate degree in a field you don’t have work experience in.
5. Professional Organizations
Consider your search for money for grad school as an ever narrowing field of options. After you’ve exhausted broader federal, state and institutional sources for funding, look within your field.
Joining organizations within your desired profession could cost you money in the form of a membership, but many groups offer student discounts. By becoming a member, you could be eligible for money the group distributes to encourage growth within the profession or further advancements within the field, according to Ryan Law, Accredited Financial Counselor and owner of Student Loan Planning.
“Professional associations that you belong to may offer scholarships and fellowships — that’s an untapped market in a lot of cases,” he said.
6. Federal Student Loans
When it comes to federal student loans, graduate students are limited to two options: Direct Unsubsidized Loans and Direct Plus Loans.
Neither of these loans are subsidized, so the Department of Education won’t pay the accruing interest while you’re in school.
However, due to COVID-19, federally held student loans are currently in forbearance through September 2021. During this period, the loans will not accrue interest and you’re free of making loan payments without incurring late fees.
But remember: You’ll likely still owe the money at some point.
Unlike Parent Plus loans, Plus loans made to graduate and professional students may be repaid under any of the income-driven repayment plans.
If you want to apply, you’ll need to fill out that familiar FAFSA application again (which you should have already done to qualify for the free money from grants and scholarships).
Also keep in mind that if you’re pursuing an advanced degree in public service and working for a government or non-profit organization, you can qualify for Public Service Loan Forgiveness. But be sure to review the list of strict PSLF requirements before considering this as an option.
7. Private Lender Student Loans
Private loans should be your last choice, until they aren’t. Huh?
That’s because the federal loans you take out as a graduate student often come at a higher interest rate than the ones offered to undergraduates, according to Law.
In theory, you went to grad school to earn a bigger paycheck, so you’ll more than likely be able to negotiate better interest rates on private loans after graduation.
“Avoid private loans while you’re going to school,” he said. “But afterwards, if you are making a good income and you’re paying high interest — the Graduate Plus loans tend to be higher than your undergrad loans, for sure — then it might make sense to refinance.”
Looking for all the ways to save on grad school can put you in a better financial situation so you can focus on your educational success.
Tiffany Wendeln Connors is a staff writer/editor at Codetic. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.